How to Figure Percentage of a Home Office

A home office may mean tax deductions.

Everyone loves a tax deduction. If you are self-employed and work from home, or if you work for another company but telecommute from home, there is a good chance tax deductions may be available to you. If you qualify, there is some basic measurements and math involved. This math is fairly easy and pays big dividends when you see how much you might save on your taxes.

Things You'll Need

• Measuring tape
• Calculator

Instructions

Figuring by Square Feet

1. Measure the square footage of your entire home, if you don't know it already. Write this number down.

2. Measure the square footage of the area you use for work in square feet. Write this number down.

3. Divide the square footage of the work area by the area of the entire home. For example, if your home is 1,200 square feet and your work area is 60 square feet, then your number is 0.05, or 5 percent of your home is for work use.

Figuring by Number of Rooms if all Rooms are the Same Size

1. Count the number of rooms used for business in your home. Write this number down.

2. Count the total number of rooms in your home. Write this number down.

3. Divide the number of business rooms by total rooms. This is your home office percentage.

Tips & Warnings

• To find the area of your home or office in square feet, multiply the length times the width. For example; if a room is 6 feet wide and 10 feet long, multiply 10 times 6 to get 60-square-feet.

• If you use the number of rooms method to determine home office percentage, all rooms must be of equal size. If they are not, you do not get an accurate home office percentage. Putting an incorrect number on your tax form could be illegal and lead to an audit.

References

• IRS: Home Office Deduction
• Real Estate Owner: Business Percentage Use
• IRS: Instructions for form 8829